Redevelopment Economy Development CDBG Housing Public Finance

Contra Costa Consortium

FY 2006/07 Home Program

In November of 1990, Title II of the National Affordable Housing Act created the HOME Investment Partnership (HOME) Program funded through the U.S. Department of Housing and Urban Development (HUD).

HOME PROGRAM PURPOSE

To expand the supply of decent, safe, sanitary, and affordable housing for very-low and low-income families and households.

CONTRA COSTA HOME PROGRAM CONSORTIUM

In June of 1993, Contra Costa County as the Urban County representative and the Cities of Antioch, Concord, Pittsburg, and Walnut Creek joined together to form a Consortium for purposes of participation in the HOME Program. The Consortium includes the unincorporated area and all cities within Contra Costa with the exception of the City of Richmond. Richmond is an independent Participating Jurisdiction (PJ) for purposes of HOME. Contra Costa County has been designated as the Consortium Representative and is responsible for implementation of the HOME Program on behalf of the Consortium. The HOME Program is administered through the Contra Costa County Community Development Department.

FY 2006/07 HOME ALLOCATION

HOME funds are allocated by formula to eligible PJs and Consortia. The Contra Costa Consortium's estimated FY 2005/06 HOME allocation is $3.3 million. Projects must be located in the Consortium area to be eligible for Contra Costa HOME funds.

CONTRA COSTA CONSORTIUM HOME PROGRAM PRIORITIES

On behalf of the Consortium, the Contra Costa County Board of Supervisors adopted the following priorities for the allocation of HOME funds:

  • Expand housing opportunities for lower-income households through an increase in the supply of decent, safe, and affordable rental housing
  • Increase homeownership opportunities for lower-income households
  • Maintain and preserve the affordable housing stock
  • Assist the homeless and those at risk of becoming homeless by providing emergency, transitional, and permanent affordable housing with appropriate supportive services
  • Increase the supply of appropriate and supportive housing for special needs populations

TARGET POPULATION

Lower-income households and families.

A. Low-income households are defined as those with incomes less than or equal to 80 percent of area median income (AMI) adjusted for household size, as defined by HUD for the Oakland PMSA.

B. Very-low income households are defined as those with incomes less than or equal to 50 percent of AMI, adjusted for household size.

C. Extremely-low income households are defined as those with incomes less than or equal to 30 percent of AMI, adjusted for household size.

ELIGIBLE ACTIVITIES AND PROGRAM REQUIREMENTS MULTIFAMILY RENTAL HOUSING

HOME funds may be used for the acquisition, rehabilitation and new construction of rental housing.

A. Minimum occupancy requirements.

  1. All rental units assisted with HOME funds must be occupied by very-low and low-income households.
  2. A minimum of 90 percent of HOME-assisted rental units must be occupied by households with incomes less than or equal to 60 percent of AMI ("60 percent households").
  3. A minimum of 20 percent of the units must be occupied by very-low income households (applies to projects with five or more units).
  4. While not a requirement, additional priority is assigned to projects which include units affordable to and occupied by extremely-low income households.
  5. See www.ccreach.org for current income definitions applicable to the HOME Program.

B. Affordability requirements/maximum rent restrictions.

  1. For low-income households, maximum rents must not exceed the lesser of: a. the Oakland PMSA Fair Market Rent minus an allowance for utilities; or b. the HUD high rent, minus an allowance for utilities.
  2. For 60 percent households, rents must not exceed the 60 percent rent limits minus the appropriate utility allowance. The 60 percent rent limits are calculated by Contra Costa County based on HUD data.
  3. For very-low income households, rents must not exceed the HUD low rent, minus an allowance for utilities.
  4. For extremely-low income households, rents must not exceed the 30 percent rent limits, minus an allowance for utilities.
  5. Note that for projects which receive a federal or state project-based rent subsidy, the maximum rent for an extremely-low or very-low income household is the maximum allowable under the federal or state program. However, the household contribution must not exceed 30 percent of monthly adjusted income as determined by HUD.
  6. Current HOME rent maximums and utility allowances are available at www.ccreach.org. Note that the specific utility allowance deducted varies with the type of utilities in the structure.

C. Minimum Required Term of Affordability.

The minimum required term of affordability depends on the average per unit assistance provided by HOME. If HOME assistance is:

  1. less than or equal to $15,000/unit, required period of affordability is 10 years;
  2. greater than $15,000, but less than $40,000/unit, required period of affordability is 20 years;
  3. greater than $40,000/unit, required period of affordability is 30 years.
  4. All new construction projects have a minimum required term of affordability of 30 years, however, the County loan and regulatory agreements are typically for a 55 year term.

D. Maximum value per unit.

No restrictions on multifamily rental housing; HOME funds to be used for non-luxury housing.

E. Eligible Property Types.

  1. one or more buildings on a single site under common ownership, management and financing; includes SROs.
  2. scattered sites under common ownership, management and financing, and receiving HOME funds as part of a single undertaking;
  3. elder cottage housing opportunity (ECHO) units;
  4. properties may be privately or publicly-owned.

F. Deed Restrictions.

Occupancy and rent requirements must be enforced through the use of recorded deed restrictions on the assisted property. In the event of foreclosure, the deed restrictions lapse.

REHABILITATION OF OWNER-OCCUPIED HOUSING

A. Occupancy Requirements.

  1. 100 percent of HOME funds used for owner-occupied housing rehabilitation must be used to assist very-low and low-income households.
  2. The assisted household must own the property. Eligible types of ownership: a. fee simple title; b. 99 year leasehold interest; or c. ownership or membership in a cooperative.
  3. The assisted property owner must agree to occupy the property as their principle place of residence throughout the term of the loan.
  4. There must be no restrictions or encumbrances limiting the marketable nature of the ownership interest.

B. Affordability Requirements.

None.

C. Required Term of Affordability.

None.

D. Maximum Value.
Appraised value of home after rehabilitation may not exceed 95 percent of the area median purchase price for Contra Costa County as defined by HUD. Currently, these limits are:

  1. $405,650 for a single family home;
  2. $371,621 for a duplex;
  3. $449,181 for a tri-plex; and
  4. $559,236 for a four-plex.

E. Eligible Property Types.

  1. 1-4 unit properties, with at least one unit occupied by owner;
  2. condominiums;
  3. manufactured housing on land owned by or under long-term lease to the owner of the housing; and
  4. cooperative units.

F. Deed Restrictions.

None. Repayment of loan required upon sale or refinancing of property.

MINIMUM/MAXIMUM HOME ASSISTANCE

A. Minimum HOME assistance per unit (average):

$1,000.

B. Maximum HOME assistance per unit (221(d)(3) limits for non-elevator-type buildings in Contra Costa County):

  1. $101,117/unit for 0-bedroom unit;
  2. $116,589 for 1-bedroom;
  3. $140,608 for 2-bedrooms;
  4. $179,979 for 3-bedrooms;
  5. $200,504 for 4+-bedrooms.

MINIMUM NUMBER OF HOME-ASSISTED UNITS

The minimum number of HOME-assisted units in a project must be proportionate to the percent of total project costs represented by HOME funds. Specifically:

No. HOME Units > or = (HOME $/Total Costs) X No. of Units in Project

MATCH REQUIREMENTS

A. Twenty-five percent match required for all HOME projects except for Community Housing Development Organization operating assistance.

B. Uses of Match.

Matching funds must be used for the provision of affordable housing as defined by the HOME Program.

  1. Nonfederal funds invested in HOME-assisted projects count as match.
    a. If 50 percent or more of the rental units in a project are HOME-assisted, matching funds invested in the entire project count as match.
    b. If less than 50 percent of the rental units in a project are HOME-assisted, only those funds invested in the HOME-assisted units qualify as match.
  2. Funds invested in mixed-use projects may also count as match as long as at least 51 percent of the project space is residential and 50 percent or more of the residential units are HOME-assisted.
  3. Investments in projects which qualify as affordable under HOME but which do not receive HOME funds are eligible as match. However, the project sponsor must enter into a legally binding agreement with the County to maintain the units as affordable in accordance with HOME requirements.

C. Eligible Forms of Match.

Match must be from non-federal sources and represent a permanent contribution to the HOME project or HOME-eligible housing.

  1. Cash from nonfederal sources. In general, cash contributions must be for HOME-eligible expenditures.
  2. Grant-equivalent of a below-market interest rate loan.
  3. Value of waived taxes, fees, or other charges normally imposed on housing development by state and local government (HOME-assisted projects only).
  4. Value of waived fees or charges normally imposed by public or private institutions associated with the transfer or development of real estate (HOME-assisted projects only).
  5. Appraised value of land or real property donated to the project.
  6. Cost of infrastructure improvements completed no more than 12 months prior to the commitment of HOME funds and directly required for HOME-assisted projects (must be prorated to HOME-assisted units).
  7. The reasonable value of any site-preparation and construction materials or equipment donated to a HOME project, provided that the materials and equipment were not acquired with federal resources.
  8. Donated or voluntary labor provided in connection with site preparation, construction, or rehabilitation of affordable housing. Unskilled labor to be valued at an hourly rate established by HUD (currently $10/hour). Skilled/professional labor may be valued at the rate normally charged by the individual providing the labor.
  9. A percentage of the proceeds of single or multi-family housing bonds issued by state or local government.
  10. An allocation of State Low-Income Housing Tax Credits.
  11. Private donations to non-profit organizations for use in developing an identified HOME-eligible project (funds must be donated for and specifically reserved for this purpose).
  12. Direct costs of supportive services provided to households residing in HOME-assisted units during the period of required affordability. Services must be necessary to facilitate independent living or required as part of a self-sufficiency program.
  13. Direct costs of homebuyer counseling services provided to households receiving first-time homebuyer assistance with HOME funds.
  14. Sweat equity labor provided to a homeownership project valued at the unskilled labor rate.

D. Ineligible Forms of Match.

  1. Contributions made or derived from federal resources or funds, including Community Development Block Grant funds.
  2. Interest rate subsidies attributable to the federal tax-exemption on financing or the value attributable to federal tax credits.
  3. Owner equity or investment in a project, including contributions from builders, contractors, or investors involved with HOME-assisted projects.
  4. Funds used to provide match for other federal programs (e.g., McKinney Act Programs).

E. Repayment of Match Funds.

Any repayment, interest, or other return on match investment must be paid into the Consortium's HOME Program account for use in funding additional projects. This requirement includes matching funds invested in projects which qualify as affordable under HOME, but do not receive HOME funds.

F. Timing of Match Credit.

  1. Consortium incurs federal match liability with expenditure of HOME funds.
  2. Match contributions are credited at the time the contribution is made.
  3. Therefore, project matching funds must be provided in the same program year in which HOME funds are expended.

MIXED-INCOME AND MIXED-USE PROJECTS

A. Eligible under HOME.

B. HOME funds restricted to qualifying units.

ELIGIBLE ACTIVITIES AND EXPENDITURES

A. Eligible Activities:

  1. real property acquisition, including first-time homebuyer assistance;
  2. site improvements directly related to and necessary for development of HOME project;
  3. new construction of affordable housing;
  4. reconstruction, rehabilitation and/or conversion of existing structures for affordable housing; and
  5. demolition.

B. Acquisition Costs

Costs of acquiring improved or unimproved real property, including acquisition by homebuyers are eligible expenditures under HOME.

C. Eligible Hard Costs Actual construction and rehabilitation costs.

  1. For new construction - Costs required to construct non-luxury housing which meets local building codes and ordinances, and the federal Model Energy Code.
  2. For rehabilitation - Cost of essential improvements needed to meet applicable rehabilitation standards, (local building codes, etc.), permit use by handicapped persons, abate lead-based paint hazards, and repair or replace major housing systems in danger of failure.
  3. For new construction and rehabilitation - Costs to demolish existing structures, provide utility connections and site improvements, and acquire improved or unimproved real property.

D. Related Soft Costs

Reasonable and necessary costs incurred by project owner/sponsor associated with the financing or development of housing projects eligible for HOME assistance, including:

  1. architectural, engineering and related professional services;
  2. developer fees;
  3. financing fees;
  4. impact fees;
  5. costs of project audit, if required by Consortium;
  6. costs to provide information services concerning affirmative marketing and fair housing information;
  7. homebuyer/tenant counseling directly related to HOME project;
  8. staff and overhead costs directly related to carrying out the project; and
  9. cost of providing an initial operating deficit reserve to meet shortfalls in project income during rent-up (maximum 18 months, eligible for rental projects involving new construction or rehabilitation only).

E. Refinancing Costs

The cost to refinance existing debt secured by housing that is being rehabilitated with HOME funds:

  1. For single family owner-occupied housing when refinancing is needed to increase housing affordability by reducing overall housing costs for the borrower.
  2. For multifamily projects if refinancing is required to permit or maintain the affordability of the HOME-assisted units.

F. Relocation Costs

Permanent and temporary relocation assistance for individuals, families, households, businesses, and other organizations or operations who are displaced as a result of a HOME project.

ELIGIBLE FORMS OF ASSISTANCE

The following are all eligible forms of assistance:

A. equity investments;

B. loans or advances with terms dependent on the financial needs of the project (e.g., zero or below market interest rate, payment deferred or amortized), including construction and bridge loans as well as permanent financing;

C. interest rate subsidies;

D. grants; and

E. loan guarantees -
note that loan funds guaranteed with HOME are subject to all HOME requirements.

ELIGIBLE APPLICANTS

Public agencies and the non-profit and for-profit community.

COMMUNITY HOUSING DEVELOPMENT ORGANIZATIONS (CHDOs)

CHDOs are a special category of nonprofit defined in the enabling legislation for the HOME

program.

A. Funds Reserved for CHDOs

Fifteen percent of the Consortium's annual HOME allocation must be reserved for affordable housing projects owned, developed or sponsored by qualified CHDOs.

B. CHDO Definition.

Required characteristics:

  1. Be organized under state or local laws.
  2. Be a non-profit [IRS 501(c)(3) or (4) certification required].
  3. Is neither controlled by nor under the direction of individuals or entities seeking to derive profit or gain from the organization.
  4. Cannot be a public body or an instrumentality of a public body.
  5. Must have standards of accountability that meet OMB requirements (24 CFR 84.21 Standards for Financial Management Systems).
  6. Must have among its chartered purposes the provision of decent housing affordable to lower-income households.
  7. Must have a clearly defined geographic service area and be accountable to low-income community residents.
    a. One-third of Board must be a combination of: residents of low-income neighborhoods; other low-income community residents; or elected representatives of low-income neighborhood organizations.
    b. AND CHDO must provide a formal process for low-income program recipients to advise the organization on decisions regarding affordable housing projects.
  8. Must have demonstrated capacity for carrying out activities to be assisted with HOME funds.
  9. CHDO must have history of serving the community within which housing is to be assisted with HOME funds.

C. Eligible CHDO Set-Aside Activities.

CHDOs are eligible for all program activities permitted under the HOME Program. However, not all HOME activities qualify under 15 percent set-aside. Eligible activities under the set-aside include the rental housing programs/projects.

HOME activity which may be performed by CHDOs, but which does not qualify for the CHDO set-aside: rehabilitation of owner-occupied housing.

D. Eligible Activities Unique to CHDOs.

1. Predevelopment/construction assistance project loans.

a. Purpose: provide access to funds for up-front, eligible project expenditures.
b. Must be related to a specific project, which, if feasible, will be eligible to receive HOME funds.
c. Provided in the form of a loan; may be forgivable if project is unfeasible.
d. Technical assistance, site control, and seed money loans eligible.

i. Technical assistance and site control loans may be used to establish preliminary feasibility of specific projects. Eligible loan uses: initial feasibility study; consulting fees; cost of preliminary financial application; fees for architectural, legal, engineering, and development team services; site control expenses; and title clearance costs.

ii. Seed money loans cover preconstruction costs for a specific project, including: cost of construction loan commitment; architectural plans and specifications; cost of zoning approvals; cost of engineering studies; and legal fees.

e. Loan terms - vary with specific project.
f. Loans repaid from construction loan or other project income; repayment may be waived if project proves infeasible.

2. Operating support.

a. Must be reasonable and necessary costs for CHDO operation.
b. Must be directly related to implementation of Consortium HOME project.
c. Assistance limited to CHDOs that are receiving or are expected to receive HOME funds to develop projects.
d. Does not require match.

PROHIBITED ACTIVITIES UNDER HOME

HOME funds cannot be used for:

A. project reserve accounts (excludes first 18 months of project);

B. operating subsidies;

C. nonfederal match required under any other federal program;

D. maintenance/operation of projects owned/leased by Public Housing Authorities;

E. prepayment of low income housing mortgages (Section 221(d)(3) and Section 236 financed housing);

F. public housing modernization;

G. to provide additional funds for federal rental rehabilitation program projects;

H. to provide additional assistance to projects which have already received HOME funds during the period of required affordability (excluding first-time homebuyer assistance);

I. emergency homeless shelters or facilities such as nursing/convalescent homes, residential treatment facilities, correctional facilities, or student dormitories;

J. acquisition of property owned by a Consortium or Participating Jurisdiction, except for property acquired in anticipation of carrying out a HOME project.

ADDITIONAL MONITORING AND COMPLIANCE REQUIREMENTS

A. Uniform Relocation Act Requirements.

HOME projects are subject to relocation requirements under the Uniform Relocation Act (URA). URA requirements are triggered whenever displacement occurs as a direct result of rehabilitation, demolition, or acquisition of a HOME-assisted project.

B. Equal Opportunity and Fair Housing Requirements.

No person shall on the grounds of race, color, national origin, religion, age, disability, familial status, or sex be excluded, denied benefits or subjected to discrimination under any program or project supported in whole or in part with HOME funds. In order to help ensure equal access to HOME-funded projects, all project recipients will be required to implement affirmative marketing procedures. In accordance with County policy, minority and women-owned business enterprises shall have the maximum opportunity to participate in the performance of contracts awarded under the HOME Program. In addition, to the greatest extent feasible, opportunities for training and employment arising from HOME projects must be provided to low-income persons residing in the program service area.

C. Environmental Requirements.

All projects must complete required environmental reviews, including the federal National Environmental Protection Act (NEPA) review process and California Environmental Quality Act (CEQA), as appropriate.

Special areas of concern under HOME:

  1. noise abatement in new construction;
  2. floodplains and wetlands in new construction;
  3. lead-based paint abatement;
  4. handling and disposal of asbestos; and
  5. impact on historical resources.

D. Labor Standards.

Davis-Bacon wage compliance and other Federal laws and regulations pertaining to labor standards apply to HOME projects with 12 or more HOME-assisted units.

E. Property Standards.

1. Housing that is constructed or rehabilitated with HOME funds must meet all applicable local codes, rehabilitation standards, and ordinances. In addition, newly constructed housing must meet the requirements of the federal Model Energy Code.

2. HOME-assisted housing must be accessible to disabled households in accordance with the requirements of the Fair Housing Act and Section 504 of the Rehabilitation Act of 1973.

F. Accessibility Requirements.

  1. The following requirements apply to all HOME-assisted rental housing projects.
    a. For new construction projects with five or more HOME-assisted units, a minimum of five percent of the HOME-assisted units must be accessible to mobility-impaired persons and an additional two percent must be accessible to vision/hearing-impaired persons.
    b. The requirements in Section F.1.a above also apply to rental rehabilitation projects with 15 or more HOME-assisted units if the HOME subsidy equals at least 75 percent of the replacement cost of the HOME-assisted portion of the project. For all other rental rehabilitation projects, a portion of the HOME-assisted units must be made accessible to persons with disabilities to the maximum extent feasible.
    c. Accessible HOME-assisted units must be distributed throughout the project and must include a range of unit sizes and amenities comparable to units in the project as a whole.
  2. The following requirements apply to all HOME-assisted owner-occupied housing.
    a. Owner-occupied housing rehabilitation programs must include accessibility improvements for disabled households as an eligible work element.
    b. Projects involving the new construction or rehabilitation of housing for sale to eligible homebuyers must be made accessible if requested by prospective purchasers with a disabled household member. Marketing materials must state that accessible floor plans and improvements are available on request to qualified households.

G. Flood Insurance.

HOME funds may not be invested in housing located in an area identified by the Federal Emergency Management Agency as having special flood hazards without flood insurance.

H. Special Monitoring Requirements - Project Recipients.

  1. Quarterly progress reports, with monitoring on an annual basis.
  2. In accordance with federal regulations, the County will require all owners/operators of HOME-assisted rental housing to verify and submit the following compliance information on an annual basis throughout the required term of affordability: tenant income; and rents for each unit.
  3. County onsite inspection of each project to ensure compliance with local building codes and standards annually for projects with 26 or more units, every other year for five to 25 unit projects, and every three years for one to four units projects.

APPLICATION PROCEDURES

A. A notice of funding availability is sent to all interested parties in October. Applications are due in December and will be reviewed by the Community Development Department and the Affordable Housing Finance Committee. Recommendations will be submitted to the Board of Supervisors for their consideration and approval in May.

B. Review criteria.

  1. Consistency with priorities identified in Consortium Consolidated Plan.
  2. Eligibility under federal regulations.
  3. Contribution to alleviation of identified, affordable housing needs in the Consortium area.
  4. Degree to which project serves target population.
  5. Feasibility and cost-effectiveness in meeting affordable housing needs.
  6. Proposed match and ability of project to leverage other resources.
  7. Experience of project team in affordable housing development, management, and related areas.
  8. Proposed affirmative marketing program.
  9. Project readiness.
  10. Evidence of local support (jurisdiction, community).
  11. Environmental, relocation and other regulatory issues.

C. Timing.

  1. Deadline for submission of applications: December 13, 2004
  2. Department and Committee review and development of recommendations for project funding for consideration by Board of Supervisors: December through April.
  3. Target date for Board of Supervisors decision on projects to be funded: early May.
  4. Consolidated Plan and projects submitted to HUD for approval May 15. Following approval by HUD and completion of required environmental review, funds anticipated to be available July 1.

D. Expenditure deadlines:
All HOME funds must be committed within three years and expended within five years.